Common Catalyst, Bessemer, Lightspeed develop start-up hunt to Europe

LONDON — A rising variety of famend U.S. tech buyers are shifting to Europe to capitalize on the continent’s start-ups.

It comes after a number of European tech firms noticed their valuations sky-rocket throughout the coronavirus pandemic. On-line occasions platform Hopin noticed its valuation soar to $7.75 billion inside two years of its incorporation, whereas buy-now-pay-later agency Klarna was most just lately valued at $46 billion.

U.S. enterprise companies are flying workers out to Europe and hiring folks already on the bottom within the area as they appear to search out the following Spotify or the following ASML, a Dutch semiconductor agency whose market worth has grown to $331 billion amid the worldwide chip crunch.

Veteran investor Alex Ferrara, a accomplice at Bessemer Enterprise Companions, which has backed firms like LinkedIn and Pinterest, moved from New York to London in September, in keeping with a enterprise capitalist aware of the matter who requested to stay nameless because of the delicate nature of the dialogue. Ferarra didn’t instantly reply to a CNBC request for remark.

Additionally final month, Silicon Valley enterprise agency Lightspeed Ventures, which has invested in Snap and Epic Video games, employed Paul Murphy and Ross Mason to guide the corporate’s push into Europe.

London-based Murphy was one of many first buyers in London-based Hopin, whereas Geneva-based Mason was the co-founder of MuleSoft, which was acquired by Salesforce in March 2018 for $6.5 billion.

In London, Lightspeed has additionally employed Adrian Radu, a former affiliate at funding financial institution Qatalyst Companions, in keeping with LinkedIn. The trio be part of Lightspeed accomplice Rytis Vitkauskas, who has been primarily based in London since Sept. 2019.

Elsewhere, Common Catalyst, an investor in Airbnb and Stripe, employed London-based Chris Bischoff as a managing director in Could and Juliet Bailin as a principal in June, in keeping with LinkedIn.

Whereas Europe nonetheless lacks a tech behemoth like Apple or Amazon, it’s house to an growing variety of tech firms value tens and even lots of of billions of {dollars} and a few imagine it is solely a matter of time earlier than Europe creates a tech agency on the identical scale because the behemoths within the U.S. and Asia.

“The consensus has morphed from believing Europe is a doomed tech backwater, to Europe has emerged as an actual world participant with a number of class proudly owning firms,” London-based investor Hussein Kanji informed CNBC, pointing to Spotify, Klarna, Revolut and Darktrace.

“Everybody who issues is opening up store in London (surprisingly the large European winner regardless of not being within the European Union anymore) or European offers,” mentioned Kanji, who’s a accomplice at Hoxton Ventures.

“It is nice for the ecosystem as a result of 3/4 of the profitable firms in Europe increase from U.S. funds anyway,” he added. “It simply makes you assume if European tech might be dominated by risk-seeking People, a lot the identical means world funding banking and the Metropolis of London is dominated largely by U.S. companies.”

Sequoia, maybe the best-known enterprise capital agency on the planet, introduced a transfer to London final yr, with veteran accomplice Matt Miller shifting from San Francisco to the U.Okay. capital.

The funding agency, which backed Apple and Google of their early days, now has an workplace in Marylebone with 4 companions and one expertise director primarily based there.

Sequoia has backed greater than 10 firms in Europe since opening the London workplace. Nevertheless, Sequoia’s whole investments on the continent are considerably increased because it has been investing in Europe for over a decade, backing the likes of Bristol-based AI chipmaker Graphcore and Stockholm-based Klarna alongside the way in which.

“Being bodily on the bottom … permits us to maneuver extra rapidly … and to dramatically stage up the trouble,” Miller informed CNBC final yr. “I used to be coming [to London] one week a month however you possibly can solely see and achieve this a lot. We felt that being on the bottom would make a fabric distinction in our skill to search out alternatives earlier.”

Elsewhere, New York hedge fund Coatue Administration confirmed this month that it’s planning to arrange an workplace in Europe.

Coatue Ventures Chairman Dan Rose informed CNBC that the European workplace might be opened in some unspecified time in the future within the close to future with out specifying the place it is going to be.

“We imagine Europe is rising as an vital innovation hub in each the private and non-private markets, as evidenced by the rise in enterprise capital exercise throughout the continent,” mentioned Rose, who was beforehand an govt at Fb and Amazon.

Not each U.S. tech investor is dashing to rent folks in Europe simply but, nonetheless. Andreessen Horowitz, for instance, nonetheless does not have any buyers on the bottom in Europe.

“They’ve carried out 5 offers within the U.Okay. and Europe in final 12 months with an honest quantity [of capital] however they’re nonetheless not prepared [to expand in Europe],” mentioned the CNBC supply.

Andreessen’s hesitancy might be all the way down to the truth that there’s nonetheless loads of alternatives within the U.S. or it could be as a result of issues do not at all times go to plan when U.S. buyers develop in Europe. A spokesperson for the agency wasn’t instantly accessible for remark when contacted by CNBC.

Google Ventures (now GV) launched a devoted Europe operation in 2015 with 5 companions primarily based out of London. Issues did not go to plan although, and the European fund was ditched after the California headquarters reportedly turned down “rather a lot” of the London companions’ funding concepts.

GV nonetheless invests in Europe nevertheless it now makes use of a worldwide fund as an alternative of a devoted European one, and the corporate has gone from having 5 companions in London to simply two.